SEC Filings

The amount of gross gains (losses), classification of the gains (losses) in the consolidated statements of income, and the accumulated other comprehensive income (loss) (AOCI) related to the effective portion of currency exchange rate contract derivative instruments designated as cash flow hedges for the three and six months ended October 27, 2017 and October 28, 2016 were as follows:

Three months ended October 27, 2017

Recognized in AOCI

Recognized in Income

(in millions)

Amount

Classification

Amount

Currency exchange rate contracts

$

30

Other expense, net

$

(10

)

Total

$

30

$

(10

)

Three months ended October 28, 2016

Recognized in AOCI

Recognized in Income

(in millions)

Amount

Classification

Amount

Currency exchange rate contracts

$

69

Other expense, net

$

6

Total

$

69

$

6

Six months ended October 27, 2017

Recognized in AOCI

Recognized in Income

(in millions)

Amount

Classification

Amount

Currency exchange rate contracts

$

(220

)

Other expense, net

$

12

Total

$

(220

)

$

12

Six months ended October 28, 2016

Recognized in AOCI

Recognized in Income

(in millions)

Amount

Classification

Amount

Currency exchange rate contracts

$

190

Other expense, net

$

22

Total

$

190

$

22

Forecasted Debt Issuance Interest Rate Risk

Forward starting interest rate derivative instruments designated as cash flow hedges are designed to manage the exposure to interest rate volatility with regard to future issuances of fixed-rate debt. The effective portion of the gains or losses on forward starting interest rate derivative instruments that is designated and qualify as cash flow hedges is reported as a component of accumulated other comprehensive loss. Beginning in the period in which the planned debt issuance occurs and the related derivative instruments are terminated, the effective portion of the gains or losses are then reclassified into interest expense, net over the term of the related debt. Any portion of the gains or losses that is determined to be ineffective is immediately recognized in interest expense, net.

The Company had $300 million of fixed pay, forward starting interest rate swaps with a weighted average fixed rate of 3.10 percent in anticipation of planned debt issuances. During the fourth quarter of fiscal year 2017, in connection with the issuance of the 2017 Senior Notes, these swaps were terminated. For the three and six months ended October 28, 2016, there were $17 million and $(6) million, respectively, of unrealized gains (losses) recorded in accumulated other comprehensive loss.

No gains or losses relating to ineffectiveness of forward starting interest rate derivative instruments were recognized in interest expense, net during the three and six months ended October 28, 2016. No components of the hedge contracts were excluded in the measurement of hedge ineffectiveness during the three and six months ended October 28, 2016. For the three and six months ended October 28, 2016, the reclassification of the effective portion of the net losses on forward starting interest rate derivative instruments from accumulated other comprehensive loss to interest expense, net was not significant.

At October 27, 2017 and April 28, 2017, the Company had $(107) million and $37 million, respectively, in after-tax net unrealized (losses) gains associated with cash flow hedging instruments recorded in accumulated other comprehensive loss. The Company expects that $33 million of after-tax net unrealized losses at October 27, 2017 will be recognized in the consolidated statements of income over the next 12 months.